In-House Counsel Seek Value from Law Firm Marketing Dollars

By Micah Buchdahl

02-27-2008, as seen in The Legal Intelligencer

Clarence Darrow is dead and the rest of you are fungible," said David Machlowitz, senior vice president, general counsel and secretary for Medco Health Solutions Inc., in Franklin Lakes, N.J. He provided this reminder while addressing lawyers and marketers in one of the seemingly thousands "what are in-house counsel looking for" seminars that take place each year.

I, too, have served as speaker and attendee at some of these sessions and rarely leave with any tidbits of information that anyone couldn't garner in a "common sense 101" class. As a former in-house attorney, I can tell you that the expectations for outside counsel are generally relatively simple: (1) be attentive and responsive; (2) keep an eye on costs; (3) whenever possible, provide me with a positive outcome.

The "fungible" label, while it may be insulting to some, is generally reality. The ability to provide sound counsel and added-value components is always nice and sometimes necessary. However, there are dozens, if not hundreds or even thousands of attorneys capable of delivering the legal services required.

As law firms continue to shift toward traditional corporate business principles, more money is being directed at marketing, advertising, business development and sales. According to statistics published by ALM Media, the largest 100 law firms in the United States spend an estimated $9 million annually on marketing; and the second 100 spend approximately $3 million a year.

The question is: Are many throwing good money after bad?

This past November, the American Bar Association held its inaugural national marketing conference in Washington, D.C. The event, which I chaired in my role as vice chair of the ABA's law practice management section, will be held twice yearly.

One of the central themes of the conference - wasted time and wasted spending by the large national law firms - met with resistance from local chief marketing officers and marketing directors in Washington. Yet, as I often find in conducting marketing audits for many of these firms, dollars and time are misspent in budgeting, staffing and strategic business development decisions.

In writing this article, I spoke with 10 general counsel from a variety of backgrounds and companies. While most preferred to answer anonymously, a couple were willing to go on record. All were emphatic and their comments were relatively consistent.

Few saw significant value in the marketing efforts of the law firms they use. And most shared similar opinions - that for outside counsel, there are better ways to spend business development dollars - and similar concerns - that much like skyrocketing associate salaries, spending on marketing has a trickle-down effect on the cost of legal services and a bottom line impact on in-house budgets.

"The end-results of these efforts are a huge amount of wasted expenditure," Machlowitz said. "I am looking for greater value at less cost. I cannot recall a single law firm marketing or advertising campaign that I would deem effective, with efforts ranging from expensive and pointless, to arrogant and unproductive."

Some general counsel noted the trend toward naming clients in firm marketing efforts and expressed the opinion that being referred to at all in their outside counsel's marketing was inappropriate. For the most part, companies are not interested in highlighting the need for legal counsel to the public at large. And outside of an offer of compensation in exchange for appearing in an advertisement (a GC-celebrity spokesman), there is no bona fide benefit to the corporate client.

Others pointed out that a lack of proper targeting sometimes has a negative impact. "The key to effective law firm marketing is targeting. If I do not feel like it is meant for me or my needs, I'm not going to pay attention to it," said Jeffrey A. Feirick, general counsel for the Clemens Family Corporation, in Hatfield, Pa.

"We use a large Philadelphia law firm for some matters. I must have received three or four promotional mailings touting their involvement in a separation of church and state case. I am part of a relatively conservative organization that does not necessarily agree with the stance they took. We are a business client and do not want to see a firm we use touting issues that are contrary to ours. Instead of having a positive effect, it leaves us asking, 'Do we want to continue to use them?'"

A number of other GCs cited law firm involvement in community and pro bono efforts that were equally counterproductive. "You always like to see charitable and pro bono participation, but, to be honest, I feel like those are just efforts that we as clients are subsidizing," said Machlowitz. "For what we pay, they should be doing a whole lot more."

One vice president and general counsel at a financial institution based in Philadelphia said nothing law firms did from a marketing perspective played any role in doling out millions in annual legal spending.

"Most of us practiced enough that our own network will supply 95 percent or more of our outside counsel," he said. "You use people you know and people that they know. I'm not going to put the company or my job at risk by using people that had nice ads or invited me to a Webinar. Do you really think I got to where I am by not knowing where to go and what to spend?"

Important Marketing Tools or 'Colossal Waste'?

Many of the endeavors directed at GCs fall on deaf ears, or simply fail. The GCs interviewed had comments on the various marketing efforts of firms.

Publications

GCs read GC-targeted publications, not magazines targeted to lawyers in general. Machlowitz pointed out that publications such as The American Lawyer (an ALM publication) highlight profits-per-partner and other reminders of how much money outside counsel is earning.

Industry Associations.

"I had a situation that called for a particular representation need. I called the respective industry association in New York, who referred me to a law firm that was a member of the organization," said Feirick. Many GCs cited the value in being an active or involved member of an industry organization, rather than a peripheral sponsor or advertiser.

Newsletters

GCs expressed no consistent preference for the method of receiving newsletters or client alerts through e-mail or hardcopy. Some prefer the ability to take the hard copy home with them. Others mentioned the value in forwarding the electronic version to other interested parties in the company. Many GCs did note, however, that only the first newsletter or client alert in the door on a particular topic likely would get read, regardless of the form.

Being Best, Super, Top, Great, Influential, Powerful or under 40

Being a Super Lawyer (or related accolade) means little. Feirick noted he is unsure of the nomination process, and Machlowitz's thoughts echoed my own. These lists generally contain some good lawyers and some lawyers that are good at self-promotion.

Martindale-Hubbell listings

Rumors of the demise of the gold standard in law firm listings are somewhat exaggerated but only somewhat. GCs interviewed admitted that Martindale-Hubbell still has some relevancy. "If I'm looking for the largest law firm in Bozeman, Mont. to handle a matter, I might turn to Martindale," said Machlowitz. In addition, with constant name changes and mergers in major markets, many well-known law firms can get overlooked.

Online listings

Few GCs use Google to find lawyers. None use Findlaw. Yet many use Law.com (a Web site operated by ALM) as a resource. And while a law firm's Web site is a biographical resource, few GCs use other components of Web sites, no matter how dynamic. None of the GCs had the time or inclination to visit a blog. "You've got to be kidding," one GC said. "I'm busy."

Branding

Across the board, those GCs interviewed could not identify a single law firm "brand" that stood out in their minds.

Media/Public Relations

While being quoted in the media can be beneficial, most GCs say they feel the quotes generally lack insight and are more likely placements by the firm's PR agencies.

Annual Reports

"This is a colossal misjudgment," said Machlowitz. "I would tell these firms to scrap their reports and instead spend time reading ours, our competitors' and key business partners.'"

Client Surveys

In the interest of full disclosure, I conduct these for a number of well-known U.S. law firms. Overall, general counsel saw client surveys as a positive step for both the client and the law firm. The corporate client is able to give feedback off the clock or the time sheet. And for firms, client surveys can provide more quantifiable results - both tangible (potential new business) and intangible (invaluable face time with a client) - than most other marketing efforts.

Some GCs noted that if the relationship partner does not take the time to do the survey, then it's essentially a waste of time. All agreed that having nonlawyers conduct the survey — regardless of their backgrounds in the legal profession - is a failed route.

Law Firm Functions

"While some seminars provide excellent content, too many are there to sell, or are 'teasers' to get the meter running on a new matter," said Machlowitz. "Do not invite me to a cocktail party," he added. "I'm busy, and if I'm going to take the time for a drink and canapé, I would like to do it with my family."

In contrast, a properly run continuing legal education seminar is a win-win situation for all involved. Feirick pointed out that no-cost, on-point CLEs on issues of interest to his company have significant value, and many firms routinely invite in-house counsel - clients, firm alumni and prospects - to their in-firm CLEs in some of the fanciest meeting rooms you'll find in any business setting.

Advertising is an important element of any Business

All the in-house counsel interviewed agreed the ability to advertise is still an important element of law firm business development, and should be properly tailored to be effective.

"I understand the challenges and needs for firms to find new clients. You need to be able to market your services," said Feirick, who cites Wolf Block Schorr & Solis-Cohen and Pepper Hamilton among the firms on his short list of about a dozen firms. The list includes a specialized boutique for environmental law, a more focused farming and agriculture law practice out of Lancaster, Pa., a sole practitioner for landlord/tenant issues and the expertise and depth of a larger law firm for corporate work.

"I think most marketing departments fail to recognize the sophistication of the audience," said a New York-based GC in the entertainment industry. "There is a disconnect. The people that need to sell me are the people that not only have JDs, but have personal practice experience."

"We look for diversity," said Machlowitz. "Show me minority partners and women partners. I'm not interested in how many offices you have or that you are nationwide. That just means you likely have less quality control and more conflicts. A lot of that overhead is getting passed on to me. We hire individual lawyers, not law firms. We use about 30 firms annually. We use some small firms for local matters, but we use all types. It might be a solo or a partner at Sullivan & Cromwell.

"The key is to tailor marketing to my specific needs," he added. "We are a Fortune 50 company. It is amazing how often we've changed up firms and the firm losing business never asks why. Instead, focus on providing some relevant and substantive legal information, like a checklist for conducting an environmental audit - that would be valuable."

A tool like a checklist for particular practice areas and issues gives a firm the opportunity to hand a client something that has substantive value at no cost to the company. While it might eliminate some smaller opportunities for the firm to consult or offer billable advice to the client, when the checklist identifies potential problems, the firm may have the opportunity to handle those new matters for the client. Another win-win situation for the client and the firm.